China has set a significant precedent by implementing new export controls that extend beyond its borders, a move that escalates trade tensions with the US Beijing’s decision to ban the sale of certain goods, including critical materials like gallium and germanium, to the United States marks a bold step in asserting its legal authority internationally, Bloomberg reports.
These new measures are a response to the US’s growing scrutiny of China’s trade practices and an effort to protect its national security interests, particularly in industries related to military and dual-use technologies.
The export restrictions, which came into effect earlier this week, target materials with both civilian and military applications, with an emphasis on ensuring that any goods containing Chinese parts or originating from China are not sold to the US The Chinese Ministry of Commerce has made it clear that these controls apply not only to Chinese companies but also to individuals and entities outside China who might attempt to circumvent the rules by re-exporting the goods.
This move mirrors the extraterritorial reach of US and European sanctions, which have been used to regulate global trade under the premise of national security. By extending its domestic laws to products sold abroad, China is challenging the longstanding dominance of the US in regulating international trade and export policies. Experts have pointed out that this is the first time China has used such extraterritorial controls, which is a significant escalation, particularly in the context of the growing competition between the two global powers.
The materials affected by these new rules are critical to the production of high-tech and defense technologies, with gallium and germanium playing vital roles in semiconductors, solar panels, and other advanced technologies. As the world’s leading supplier of these minerals, China has long held considerable influence over industries reliant on these resources. Before the restrictions were enacted, China was a crucial supplier of gallium and germanium to the US, and the new controls are likely to further disrupt the supply chain for industries in the US that depend on these materials.
The timing of the new export controls is noteworthy, coming just weeks before President-elect Donald Trump takes office. During his campaign, Trump expressed a strong stance on confronting China’s trade practices and seeking a more balanced approach to US-China relations. This move by Beijing could be seen as an attempt to solidify its position before the new administration takes charge, signaling China’s readiness to counter the US’s global influence with its own assertive economic policies.
China has been taking increasing steps to strengthen its regulatory power in recent years. The establishment of the “Unreliable Entity List” and the “Export Control Law” in 2020, followed by the “Anti-Foreign Sanctions Law” in 2021, shows Beijing’s growing efforts to safeguard its interests in the face of what it perceives as economic coercion from the US These recent export controls build on that framework, with the Chinese government stating that its actions are in line with its domestic laws and aimed at protecting national security and economic stability.
While the US government has criticized these restrictions, arguing that they are detrimental to international supply chains, China has defended its actions as necessary to protect its sovereignty and to prevent economic coercion. Ministry of Commerce spokesperson He Yadong emphasized that the US had “abused export control measures,” which, according to China, had severely destabilized global supply chains.
This development underscores the escalating competition between the US and China in the global technological and geopolitical arenas. The new export controls are not only a response to US actions but also a part of China’s broader strategy to assert itself as a dominant force in global trade and technology. With Trump preparing to take office and continue his tough stance on trade with China, these actions may only increase tensions, setting the stage for more intense negotiations in the years ahead.
For companies and industries that rely on Chinese materials, this move underscores the growing risks of doing business with China and the need to seek alternative sources for critical materials. However, China’s dominance in many of these minerals means that such alternatives may be hard to come by, and businesses will have to carefully navigate the evolving global trade landscape.
